Is 'thin' in for solar?

Monday

Sep 30, 2013 at 12:01 AMSep 30, 2013 at 5:07 AM

Five years ago, a promising solar technology was all the rage in Silicon Valley. Several startups were experimenting with a compound known as CIGS - shorthand for copper indium gallium selenide - that advocates said represented a great leap for the industry. Known as "thin-film" because of the thin and flexible panels, the promise of CIGS was that it would be less expensive to manufacture than traditional silicon-based solar panels but still highly efficient at turning the sun into electricity.

Five years ago, a promising solar technology was all the rage in Silicon Valley. Several startups were experimenting with a compound known as CIGS — shorthand for copper indium gallium selenide — that advocates said represented a great leap for the industry. Known as “thin-film” because of the thin and flexible panels, the promise of CIGS was that it would be less expensive to manufacture than traditional silicon-based solar panels but still highly efficient at turning the sun into electricity.

Startups like MiaSole, Nanosolar, SoloPower, Solyndra and others attracted massive amounts of funding from some of the valley’s top venture-capital firms.

But, also, the timing was terrible for the startups. Chinese manufacturers began aggressively pricing silicon-based panels and driving costs down just as the CIGS companies were trying to get their manufacturing lines up and running.

Then the global recession hit, leaving Silicon Valley littered with CIGS companies that filed for bankruptcy, were sold at fire-sale prices, or struggled on.

Probably the most infamous, Solyndra, went bankrupt two years after receiving a half-billion-dollar loan guarantee from the federal government. The scandal? One investor who pushed the president to support the guarantee was a big contributor to his campaign.

While Silicon Valley’s CIGS dream largely imploded, work on the technology continues at the nation’s top energy labs and universities, and some say CIGS still holds enormous potential. Lux Research estimates that the market for solar installations based on CIGS thin-film panels will reach $2 billion in 2015, as manufacturers improve efficiencies.

“The book isn’t entirely closed on CIGS,” said Shayle Kann, vice president for research at Greentech Media.

“CIGS was a new technology with complex manufacturing processes that require scale and maturation to be competitive. A lot of companies were trying to scale, but it was the worst possible timing: The price of silicon panels was falling through the floor. Solar Frontier is the only CIGS company that is operating at large scale.”

Solar Frontier isn’t in Silicon Valley; it’s in Japan. Founded in 2007, it is 100 percent owned by Showa Shell, a subsidiary of Royal Dutch Shell, which made a $1 billion investment in Solar Frontier’s factory. Japan is the world’s hottest solar market after the 2011 Fukushima nuclear disaster, and the Japanese government requires utilities to buy renewable power at fixed prices.

“CIGS is very much alive,” said Charles Pimental, chief operating officer for Solar Frontier in the Americas, based in Santa Clara, Calif. “Many companies failed to survive because they underestimated the technological challenge and capital required to bring CIGS to scale.”

Pallavi Madakasira, who worked at Santa Clara-based MiaSole in 2005 and 2006 and is now an analyst at Lux Research, looks back on the CIGS gold rush with amazement, saying that many companies made wild claims about cost and efficiency, even though they had no experience manufacturing solar panels beyond the lab.

“Five years ago, CIGS was the next big thing,” Madakasira recalled. “Investors were flocking to any CIGS company they could get their hands on. Startups were making massive claims about cost and efficiency with no products in the market. Everyone was trying to outdo each other. And the venture capitalists got too greedy and wanted quick returns, and that didn’t help anybody.”

MiaSole was founded in 2001 and raised roughly $550 million from investors, including Kleiner Perkins Caufield & Byers and VantagePoint Capital Partners. But last fall, the company was sold to China’s Hanergy for a reported $30 million. MiaSole now operates as a unit of Hanergy; neither MiaSole nor Hanergy responded to a request for comment.

Nanosolar, which in 2006 boasted of plans to make enough solar cells to generate 430 megawatts of electricity, had Heritage Global Partners auction off its San Jose, Calif., equipment recently.

“A good number of people in Silicon Valley rushed to get into thin-film. They had manufactured things before,” said Rommel Noufi, a scientist who works on CIGS at the National Renewable Energy Laboratory in Colorado.

“The investors had a short time horizon. In solar, that’s misguided. It takes time. Some companies got caught on a short leash, and they couldn’t deliver on time.”

Despite the washout, not all CIGS startups have given up hope. San Jose-based Solexant, which is in research-and-development mode and has about 20 employees, remains bullish on the technology and named Markus Beck, a highly regarded CIGS veteran, as chief technology officer in April.

“It’s our belief that all the promise of CIGS still exists,” said Robert Wendt, Solexant’s vice president of process engineering. “It’s a matter of how you capitalize on its promise.”